Title: Does the voluntary adoption of integrated reporting affect the value relevance of accounting information? Empirical evidence from Europe

Authors: Salvatore Loprevite; Daniela Rupo; Bruno Ricca

Addresses: Department of Sciences of the Society and the Mediterranean Area Formation, University Dante Alighieri of Reggio Calabria, Via del Torrione, 95 – 89125 Reggio Calabria, Italy ' Department of Economics, University of Messina, Piazza Pugliatti, 1 – 98122 Messina, Italy ' Department of Economics, University of Messina, Piazza Pugliatti, 1 – 98122 Messina, Italy

Abstract: This study verifies whether the voluntary adoption of an integrated report in Europe under the <IR> framework is associated with the value relevance of summary accounting information. We compare a sample of European listed companies that publish Integrated Reports (IR-firms) under the <IR> framework with companies that do not publish it (NIR-firms). To analyse the association between market value (MV) and traditional accounting information (book value and earnings), we use multivariate regression linear models and generalised linear models (GLM). The results of our analysis show that the adoption of IR appears to strongly affect the value relevance of summary accounting information. For IR-firms, we find significant lower value relevance for earnings and slightly higher value relevance for book value, compared to NIR-firms. Additionally, our findings reveal that for both groups the level of investments on intangibles is positively associated to market value but with a significantly higher association for the IR-firms.

Keywords: integrated reporting; international integrated reporting framework; value relevance; accounting information; market effects; generalised linear models; GLM; <IR> framework; non-financial voluntary or mandatory reporting; agency theory.

DOI: 10.1504/IJMFA.2019.104131

International Journal of Managerial and Financial Accounting, 2019 Vol.11 No.3/4, pp.238 - 268

Received: 26 Feb 2019
Accepted: 24 Apr 2019
Published online: 16 Dec 2019 *

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